Market Overview

Manchester United Plans to List in US

Manchester United, one of the biggest soccer clubs in the world, has scrapped plans to list shares in Asia and has instead opted for a U.S. listing. This is the latest in a string of listings to be pulled from Asian exchanges, especially from Singapore. Last summer, Manchester United was reportedly close to a listing in Singapore until market conditions and other factors forced them to scrap the plans.

Issuing shares in the U.S. instead of England or other European exchanges is an interesting decision for the club, as soccer is not as big of a sport in the U.S. as it is abroad. One potential reason for the U.S. listing may be to build a larger fan base domestically and to try to grow viewership of the sport. However, it could also be that the Glazer family, the American owners of the club who bought it in a debt-funded leveraged buyout back in 2005 for $790 million, may just feel more comfortable selling the shares domestically.

The Glazer family intends to use the proceeds to pay down the approximately $650 million in debt that is on the club's books. For the nine months ended March 31, the club saw pre-tax profits halve to nearly $25 million compared to the year-before period. Over the same period, the club has paid over $65 million in interest on the debt.

Soccer clubs derive revenue from multiple sources, including ticket sales, television rights sales, and merchandising. The initial reasoning behind an Asian listing was to take advantage of the large fan base in Asia. However, due to volatility in the region, it may not allow them to maximize value. The owners hope that a U.S. listing will allow an offering that maximizes value for both sides.

By paying off the debt, Manchester United will be more flexible in its financial positioning. With the upcoming implementation of the Financial Fair Play Regulations, it will be crucial for clubs to get their finances in check to stay competitive. Big clubs have been successful by buying talent using borrowed money, however, the new rules are set to make it so that clubs can only spend that which they make. By paying down the debt, the club will thus have more spending power for transfer targets.

Manchester United finished second in the Premier League last season and won no major championships.

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